MRP stands for Material Requirements Planning. An MRP is essentially a manufacturing-focused version of an ERP or Enterprise Resource Planning solution, which contains accounting, inventory management, CRM, e-commerce, sales, and human resource capabilities.
The many manufacturing and other types of features included in an MRP include:
- Bill of materials
- Business planning
- Capacity requirements planning
- Computer-aided design
- Configuration management
- Contract management
- Cost control
- Costing methods
- Engineering change control
- Finite capacity scheduling
- Inventory control
- Inventory tracking
- Item data
- Material requirements planning
- Production resources data
- Production schedule
- Project management
- Purchasing management
- Sales analysis
- Shop floor control
- Shop floor data collection
- Tool management
Let’s go through each one of these features and explain what they are and how they work within an MRP.
Bill of Materials - A bill of materials is essentially a list of all of the parts and other materials that go into manufacturing a final product. It includes part names, costs, quantities, and more. A bill of materials can be used for assembly, disassembly, repair, replacement, and other types of manufacturing jobs.
Business Planning – Business planning is broader than just the manufacturing aspect of a company. It includes new hires, payroll, cash flow, and other things that affect manufacturing.
Capacity Requirements Planning – A manufacturer’s capacity requirements planning is an analysis of its supply and demand to determine the optimal production level over a certain period of time.
Computer-Aided Design – Creating a prototype can be an expensive proposition, especially if it’s difficult to visualize and calculate how much it will cost to manufacture. Computer-aided design software solves this problem by allowing manufacturers to generate a digital version of a new product and then generate a bill of materials for it from the theoretical design. Then it’s a matter of deciding if it’s worth the cost and then putting it together, if it is.
Configuration Management – Configuration management is all about keeping machines and tools in working order. You want to make sure they keep producing the same results time after time all through their lifecycle until they need to be replaced by something new.
Contract Management – Contracts are made with employees, business partners, suppliers, and customers, and they must be recorded and abided by as a company performs its business transactions. Contract management is how a company stays on top of all of the obligations it has made with everyone it works with.
Cost Control – As its name suggests, cost control is the process of calculating the costs of labor, production, storage, etc. in order to keep them under control and find new ways to be more efficient.
Costing Methods – The four main costing methods that manufacturers often use are LIFO, FIFO, Average Cost, and Standard Cost. LIFO applies the cost of the most recently purchased part to all other copies of it. FIFO does the same with the earliest part. Average Cost takes an average of all the part copies’ costs over time. Standard Cost includes labor and other ancillary costs to calculate a final product’s total cost to manufacture.
Engineering Change Control – Whenever a change is made to a bill of materials or the way a shop floor is configured, it falls under the umbrella of engineering change control. All changes are recorded in the MRP to see their effect on the overall manufacturing process over time and determine which changes are beneficial and which changes are not.
Finite Capacity Scheduling – Keeping in mind that a company doesn’t have infinite resources to keep manufacturing goods until the end of time, finite capacity scheduling allows companies to realistically determine how best to use their limited time and resources to manufacture the optimal number of parts to meet demand.
Inventory Control – Inventory control includes warehouse management, supply chain management, order fulfillment and many other aspects of getting materials into and out of the warehouse.
Inventory Tracking – There are many ways to track inventory, including lot number, serial number, expiration date, and revision levels, just to name a few.
Item Data – When an item was purchased or manufactured, its total cost, price point for customers, ingredients or parts that make it up, and many other details are tracked as part of item data in an MRP.
Material Requirements Planning – Planning for the right levels of inventory, manufacturing, and much more go into material requirements planning. It’s a huge category all by itself.
Production Resources Data – In-depth information on manufacturing equipment, parts, and personnel will be found in production resources data.
Production Schedule – The production schedule includes what products are being manufactured at what rate, which parts are needed to manufacture them, and who is responsible for them.
Project Management – Project management is the process of organizing the efforts of a team in order to complete a project on time and on budget.
Purchasing Management – Basically another term for supply chain management, purchasing management is the process of obtaining the right number of raw goods and materials to keep production running at full capacity.
Sales Analysis – Analyzing a company’s sales over time allows them to make accurate forecasts for the future. They may discover seasonal changes in demand or that certain items are frequently ordered together, which will help them plan their production schedule and even restructure their warehouses.
Shop Floor Control – Shop floor control takes into account how efficiently employees and equipment are functioning to ensure the safety of workers and the quality of finished goods.
Shop Floor Data Collection – Get a real-time overview of the status of all manufacturing jobs through shop floor data collection. If a product is currently in the process of being made, you can see which production stage it’s currently on.
Tool Management – It’s important to know exactly where your tools are at any moment, so this function helps employees know where to put their tools when a job is finished and where to find them when it’s time to start a new manufacturing job.
Fishbowl Manufacturing is not an MRP and it doesn’t have the same comprehensive features as an MRP. But it does allow manufacturers to use multilevel work orders, manufacture orders, bills of materials, production stages, inventory tracking, supply chain management, and detailed reports to help with the manufacturing system process. Also, it integrates with SolidWorks to bring computer-aided designs into reality by generating a bill of materials for 3D designs.
An MRP helps manufacturers with their bill of materials, business planning, capacity requirements planning, computer-aided design, configuration management, contract management, cost control, costing methods, engineering change control, finite capacity scheduling, inventory tracking, production data and schedule, project management, purchasing management, sales analysis, shop floor control, and tool management.